Measuring and assessing the impact of basic skills on labour market outcomes

Abstract

The role of basic literacy and numeracy skills in the labour market is relatively under-researched in the United Kingdom (UK). The effect of basic literacy and numeracy skills on labour market outcomes was highlighted in ‘Improving literacy and numeracy: a fresh start’, a report by Claus Moser on the basic skills of adults in the United Kingdom (UK) which was published by the Department of Education and Skills (DfES) in 1999. This report revealed the high level of literacy and numeracy difficulties amongst the British population, and suggested that this ‘skill gap’ is one of the worst in Europe generally. The report recommended a National Strategy for Adult Basic Skills to reduce the number of functionally illiterate and innumerate adults. To investigate the possible benefits of such a strategy and to address the lack of research in this field, this paper provides an evaluation of the economic returns to better literacy and numeracy skills. The authors measure UK workers’ basic literacy and numeracy skills using data from the National Child Development Study (NCDS) and the International Adult Literacy Survey (IALS). The impact of these skills are evaluated particularly in relation to wages. The findings indicate better wage and employment returns for those workers with higher level literacy and numeracy skills.